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Key Takeaways
A report by the G20 Independent Expert Group (IEG) urges MDBs to revamp and expand the role of the GIF. The report, Strengthening Multilateral Development Banks: The Triple Agenda – A Roadmap for Better, Bolder, and Bigger MDBs, highlights the GIF’s central role in infrastructure project preparation and emphasizes our successful track record in mobilizing private capital. As the global community calls on multilateral development banks to be better, bolder and bigger, the GIF will need to grow by a factor of five to meet the need for accelerated preparation of a pipeline of bankable infrastructure projects in Emerging Markets and Developing Economies (EMDEs) for private investment at scale.
According to the report, the GIF is uniquely positioned as a gateway to scale in project preparation and private sector participation in infrastructure through its ‘whole-of-the-MDB-system’ approach and its structured collaboration between EMDEs, MDBs and the private sector. But, the GIF is currently far too small to drive the transformation required in sustainable infrastructure investment to meet the SDGs and Paris climate goals.
Revamping the GIF is one answer to persistent challenges Emerging Markets and Developing Economies (EMDEs) and MDBs face in attracting private investment for infrastructure. By directing more funds to the GIF, MDBs could mobilize much higher volumes of private finance. “The GIF has established a successful record in project development and in private capital mobilization, working with 10 MDB partners. But the GIF is currently far too small to realize its potential,” the report notes. “The Global Infrastructure Facility can play an important role in fostering a systemwide approach in the crucial area of project preparation and building a more effective partnership with the private sector.”
In addition to calling for more support for the GIF, the IEG report finds that MDBs must change their operational models for infrastructure. Instead of pursuing individual, one-off projects, MDBs should shift toward government-led programmatic initiatives that cover whole sectors over multiple years. The GIF already facilitates the creation of programmatic approaches at country and local level and can help scale those through standardization and replication.
Ultimately, the challenge of increasing public-private infrastructure investment in EMDEs is related to risk and how to allocate and manage it. The GIF’s support to enhancing project and program readiness and facilitating project structuring significantly reduces risk for private investors. Strengthening the GIF would enable it to serve a wider base of technical partners, including EMDE governments, MDBs, NDBs and the private sector to accelerate the establishment of infrastructure as an asset class and move from billions to trillions in infrastructure finance, leveraging partners’ work on supporting investment climates, regulatory environments and technical assistance in the process.
